. To borrow $2.2bn to support economic reforms
. Endorses N250bn real estate investment fund
By Tochukwu Bliss, Abuja
The Federal Executive Council (FEC), yesterday, approved a ₦47.9 trillion national budget proposal for the 2025 fiscal year.
The budget forms part of the Medium-Term Expenditure Framework (MTEF) for 2025–2027, in accordance with the Fiscal Responsibility Act of 2007.
The Minister of Budget and Economic Planning, Atiku Bagudu, announced this to State House Correspondents, following a FEC meeting presided over by President Bola Tinubu.
According to Mr. Bagudu, the fiscal strategy adopted is conservative to ensure stability, though there is optimism that actual revenues may surpass projections.
He said: “And equally, the fiscal objectives were conservative, because we want to ensure that we study the course much as we believe the projections will be exceeded.
“The budget size that was approved for presentation to the National Assembly in the MTEP is ₦47.9 trillion, with new borrowings of ₦9.2 trillion to finance the budget deficit in 2025.
“We need to sustain the market deregulation, commendable market deregulation of petroleum prices and exchange rate, and to compel the Nigerian National Petroleum Company Limited to lower its oil and gas production cost significantly, and even to consider the need to amend the relevant sections of the Petroleum Industry Act 2021, to address the significant risk to Federation.
“The Federal Executive Council approved the Medium-Term Expenditure Framework and the physical strategy paper, and it will be submitted to the National Assembly. “This in addition to bills that are already at the National Assembly, the economic stabilization bills and tax reform bills, which we believe will have a very, very strong growth in 2025.”
The Council approved the submission of the Framework to the National Assembly as required by the 2007 Fiscal Responsibility Act.
The framework projects a gross domestic product (GDP) growth rate of 4.6%, an exchange rate of $75 to the naira, and oil production of 2.06 million barrels per day.
We need to sustain market deregulation, commendable market deregulation of petroleum prices and exchange rate, and to compel the Nigerian National Petroleum Company Limited to lower its oil and gas production cost significantly…
External borrowing
Meanwhile, the FEC also approved a $2.2billion external borrowing plan to strengthen the country’s finances and support economic reforms.
The Minister of Finance, Wale Edun, informed that the financing package will be raised through a combination of Eurobonds and Sukuk bonds, with approximately $1.7 billion expected to come from the Eurobond offer and $500 million from Sukuk financing.
He said the financing package will be raised through a combination of Eurobonds and Sukuk bonds, with approximately $1.7 billion expected to come from the Eurobond offer and $500 million from Sukuk financing.
He said the move was aimed at completing the federal government’s borrowing programme and will proceed once the National Assembly reviews and approves the plan.
The Minister said the borrowing will take place within the 2024 fiscal year, with the final structure of the funding to be determined by market conditions and the recommendations of transaction advisers.
He said: “The first objective is to complete the federal government’s external borrowing program with the approval of the $2.2 billion financing package, which will include access to the international capital market through a combination of Eurobonds and Sukuk bonds—approximately $1.7 billion from the Eurobond offer and $500 million from Sukuk financing.
“The actual composition of the financing will be finalized once the National Assembly has considered and approved the borrowing plan. After the external borrowing approval is granted, the funds will be raised as soon as possible within the year.
“The exact combination of instruments will depend on the advice of transaction advisers and market conditions when we decide to enter the market.
“Earlier in the year, we demonstrated the resilience of the Nigerian financial markets and their capacity to handle more complex and sophisticated offerings, such as the domestic issuance of dollar bonds that attracted investors from both Nigeria and abroad.”
Recall that Mr Edun had in April spoken about a $2.25billion World Bank loan, during a press briefing at the end of Nigeria’s activities at the World Bank/International Monetary Fund Spring Meetings in Washington DC, the United States.
He said: “We have qualified for the processing just this week to the Board of Directors of the World bank of a total package of $2.25 billion of what you can call ‘the closest you can get to a free lunch’- virtually a grant.
“It’s for about 10-20 years moratorium and about 1% interest.”
He had listed diaspora remittances, foreign portfolio investments, and facilities from the World Bank and other international development partners as sources for the loan.
Edun underscored the importance of the approval as a sign of growing confidence in Nigeria’s economic recovery under President Bola Tinubu’s administration.
He highlighted the resilience of the Nigerian financial market, citing recent successes in domestic dollar bond issuances that attracted both local and international investors.
He further explained that the government’s economic programme, which includes market-based pricing for key economic variables like petroleum products and foreign exchange, has paved the way for this latest international borrowing.
The exact combination of instruments will depend on the advice of transaction advisers and market conditions when we decide to enter the market.
Real estate investment fund
Additionally, Mr. Edun disclosed that the FEC also endorsed the creation of a N250 billion Real Estate Investment Fund, to tackle Nigeria’s housing deficit and provide long-term, affordable mortgage financing for Nigerians.
He explained that the Fund will provide Nigerians with the opportunity to secure mortgages at interest rates significantly lower than the current market rates, which can exceed 30%, with tenures that could extend up to 20 years or more.
He said: “Approval has been granted for the Ministry of Finance Incorporated (MOFI) Real Estate Investment Fund. This fund will serve as the basis for the revival of long-term mortgage financing in the Nigerian economy.
“The MOFI Real Estate Investment Fund will initially amount to N250 billion and will provide low-cost, long-term mortgages to Nigerians who wish to acquire homes. It will help address part of the 22-million-unit housing deficit.
“Of course, it will create jobs, stimulate economic growth, and pave the way for other private sector investors to participate in the housing construction industry, with significant benefits for the broader economy.
“The concept is long-term. Investors will have the opportunity to earn market rates of interest and returns on investment, blended with seed funding of N150 billion.”
